Unity Software Rises on Q3 Earnings Beat

"Unity Software delivered a blowout third quarter on Wednesday morning, crushing both revenue and earnings expectations in a dramatic turnaround from the company's disastrous Q1 performance earlier this year. The stock was trading near $36 at the time of filing, essentially in line with analyst price targets despite a recovery that has lifted shares 141% from their 52-week low of $15.33."

"Unity posted adjusted earnings of $0.20 per share against estimates for a $0.24 loss, a swing of $0.44 that reflects genuine profitability improvement rather than accounting adjustments. Revenue of $471 million beat expectations by 2.3%, driven primarily by strength in the Grow Solutions segment, which generated $318 million and grew 6% year over year. CEO leadership attributed the outperformance directly to Unity Vector AI adoption and continued momentum in the Create Solutions business."

"Adjusted EBITDA reached $109 million, representing a 23% margin. That's meaningful profitability on an operating basis, even if the company remains unprofitable under GAAP standards (net income came in at negative $127 million). Operating cash flow jumped to $155 million from $122 million in the year-ago quarter, and free cash flow landed at $151 million. I'd keep an eye on that cash generation. It signals the company is moving from financial stress toward sustainable operations."

Unity Software reported a blowout Q3, beating revenue and earnings estimates and recovering from earlier weakness. Adjusted EPS was $0.20 versus an expected $0.24 loss, and revenue reached $471 million, driven by Grow Solutions' $318 million and 6% year-over-year growth. Adjusted EBITDA was $109 million (23% margin). Operating cash flow rose to $155 million and free cash flow to $151 million, signaling improving cash generation. Create Solutions grew 3% to $152 million, showing deceleration. Management guided for high-single-digit Create growth in Q4. GAAP net income remained negative $127 million.

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